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Aerospace job declines ease during first quarter: L.A. may have weathered the worst of the defense cuts

Los Angeles Business Journal - April 16, 1990

Aerospace job declines ease during first quarter

L.A. may have weathered the worst of the defense cuts

High-technology aerospace industry employment in Los Angeles County pulled out of a steep nosedive during the first quarter.

That is heartening news for the local economy because aerospace accounts for 30.5 percent of all manufacturing jobs here.

Employment in the county at L.A-based Hughes Aircraft Co., for example, leveled out at 32,000 at the end of the first quarter, unchanged from three months earlier, after diving 18 percent from 39,000 at March 31 last year.

El Segundo-based Rockwell International Corp. said its L.A. County employment totaled 23,400 at the first quarter's end, down 0.6 percent from the 23,550 of three months earlier and 0.4 percent from the 23,500 of a year ago.

Century City-based Northrop Corp. reported its first-quarter employment in L.A. County at 18,575, off 3 percent from the 19,135 at year-end 1989 and down 8 percent from the 20,300 of a year earlier.

Calabasas-based Lockheed Corp. revealed its L.A. County employment of 13,550 at the first quarter's end was down 6 percent from the 14,460 of three months earlier but down 12 percent from the 15,410 of a year earlier.

Beverly Hills-based Litton Industries Inc.'s L.A. County employment eased 2.6 percent to 5,600 at the end of the first quarter from 5,750 three months earlier but fell 8.2 percent from 6,100 a year earlier.

And a 23-percent employment growth last year at Long Beach-based Douglas Aircraft Co., now the largest manufacturing employer here, helped smooth out the steeper declines at some other companies in the county. First-quarter Douglas employment in L.A. County totaled 45,000, up roughly 1,000 from year-end 1989 but up 30 percent from the 34,500 in the first quarter last year, a company spokesman said.

Such individual company figures seem to track with the total high-tech aerospace industry's employment in L.A. County: 270,100 in the first quarter, down a scant 0.7 percent from the 272,000 of year-end 1989. Jack Kyser, chief economist at the Los Angeles Area Chamber of Commerce, said aerospace employment is down 7 percent from the 290,300 of a year ago and 11 percent from the peack of 303,600 at year-end 1986. What this shows, Kyser said, is that L.A. already has had the fall-off people have been predicting for the industry.

Within that umbrella industry heading, though, are some startling differences in L.A. County employment, Kyser said:

* Electronic equipment jobs eased to 70,200 during the first quarter from 70,300 during the last quarter of 1989, and from 70,400 from a year earlier, he said, but was down 41 percent from the 118,700 of December 1986.

* Guided missile and space vehicle employment of 16,300 during the first quarter was off 3 percent from the 16,800 of last December but down 10 percent from the 18,100 of a year earlier and 15 percent from the 19,200 of year-end '86.

* Aircraft and parts employment of 130,600 was unchanged during the first quarter from year-end '89, Kyser said, but that actually was higher than the 129,500 of a year earlier and 128,200 of December '86. Indeed, new commercial aircraft orders seem to indicate firm backlogs to at least 1995.

A Douglas spokesman put the company's first-quarter commercial aircraft backlog at: 905 (429 firm) orders for MD-80 twin-jets and 340 (126 firm) orders for MD-11 trijets. The Douglas backlog also included 95 orders from four customers for the new MD-90 twinjet, a derivative of the MD-11, he said, and the company has been discussing with prospects the MD-12X, a proposed trijet derivative of the MD-11.

Kyser referred, too, to significant new business locally to repair aging commercial jets and to modify commercial aircraft to comply with more stringent government regulations. Meanwhile, TRW Inc. in Redondo Beach and Hughes Aircraft are aiming to get new orders to help solve critical European air traffic control problems, Kyser said.

Still, all the new commercial business is unlikely to completely offset the continued cutback in defense spending that actually began in fiscal '86. By fiscal 1995, Defense Secretary Richard Cheney said, defense spending will have undergone a cumulative 10-year real decline of 22 percent to represent the lowest percentage of the gross national product in 50 years.

The chamber's Kyser fears a slide in fabricated metal product employment, resulting partially from defense cutbacks but also from problems with tougher air quality regulations here, will make L.A. into a "high-low economy." That is, he explained, because of a possible disappearance of "blue-collar" jobs that previously provided employment-entry work to people without college degrees who subsequently could move up the ladder.

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